Growth

Shan-Hung WuCS, NTHU

Default Alive or Dead?

• Assuming– An initial fund– Fixed expenses – Linear/predictable revenue growth

• Can you make it to profitability before running out of your money?

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by Paul Graham

Startup Growth Calculator

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What’s Next?

• Default alive:– Ambitious new things– Scale phase– Raise more fund (O)

• Default dead:– Raise more fund (X)– To fix growth & revenue– at no (or little) more expense

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Outline

• Metric• Actions & Psychology

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5 Whys

Vanity Metrics

• #shares• #likes• #reviews

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Virality

• Inherent virality: a function of use, e.g., Messenger

• Artificial virality: forced, often built into a reward system

• Word-of-mouth virality: conversation of satisfied users, product-independent

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KPIs

• Viral coefficient• Viral cycle time

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Viral Coefficient

• The number of new users/customers that each existing user/customer successfully converts

• VC = IR * AR– How to increase IR?– How to increase AR?

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Existing users 2,000

Total invitations 5,000 Invitation rate 2.5

Downloads 1,000 Acceptance rate 0.2

Viral coefficient 0.5

Viral Cycle Time

• Avg. time required for each conversion– Time to invite + time to accept

• Assume 2k initial users and VC = 0.5, after 20 days:– 115K users if cycle time = 2 days– 6.6M users if cycle time = 1 day

• How to reduce time to invite?• How to reduce time to accept?

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More Metrics

• Track user actions that drive virality– E.g., #shares, time-to-share, #likes, etc.

• Watch the word-of-mouth (qualitative)– Inject hashtags into shared text– Monitor hashtags using tools like TweetDeck

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Line in the Sand

• You viral coefficient will saturate– Depending on how “tight” between users

• Generally, VC > 1 means you are “viral”– Grow without much marketing/PR budget

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• If you are viral, your growth will looks like a Bass diffusion curve:

– Usually, the initial flat period is much longer• Y-Combinator teams: 5% per week

Goals for Growth

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Outline

• Metric• Actions & Psychology

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VC, VCT

5 Whys

Marketing is about selling more stuff to more people more often for more money more efficiently.

- Sergio Zyman, CMO, Coca-Cola

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What to optimize first?

Stop the Leaky Bucket!

• Reducing churn rate is the first step of growth• User churn rate ≠ customer churn rate– Track both

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Why Is Churn Rate So Important?

• May define an upper bound of your business– E.g., customer churn

rate over ARR• Usually, re-engagement is more cost-effective than acquisition– E.g., via tailored emails

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Turn Your Happy Customers into Sales

• How?

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Ratings & Reviews

• Shown on your (app) landing page• Very important– Humans, when having little clue, tends to believe

social proof

• Ranking factors:– App Store: #ratings > #installs > trends > avg.

rating– Google Play: #ratings > #installs > avg. rating >

trends19

How to Get Positive Ratings/Reviews?

• Ask users to rate at right time, with right pattern– “Like” à rate– “Dislike” à feedback– when users are happy– and not interrupted

“Ask Later”“Don’t Show Again”

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Then?

• There are many Growth Hacking books…

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Common Selling Tactics• Halo effect• Quality comes with the price ($1 à $2)• Contrast principle• And many more…

• Q: How to tell your mon you failed a class?

• Based on stereotypes• … and “fast thinking” shortcuts

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6 Psychological Principles

• Reciprocation• Consistency• Social proof• Liking• Authority• Scarcity

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by Robert B. Cialdini

Reciprocation• Shortcut: we should try to repay in kind, what

another person has provided us– Tactics: free samples

• Reciprocal concession: make a large request first. After refusal, make second as concession– Leverages the contrast principle– Tactics: down selling

• Which one to sell first? Expensive or cheap ones?• Flora?

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Commitment & Consistency

• Shortcut: after making a commitment, we behave consistently with it– Tactics: “How are you doing?” or “Sign here!”

• Pressures:– Personal– Interpersonal (for public commitment)

• Has long-term effect on one’s self-image– E.g., US PoWs start from “US is not perfect”

• Flora?

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Social Proof

• Shortcut: we view a behavior as correct when seeing others like us doing it– Tactics: canned laughter, seed tips

• Works particularly wellin unknown situations

• Selling “Price” featurein Flora?

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Liking• Shortcut: we are more likely to like something that

relates to what we already like– Tactics: Cars with hot girls

• What cause liking?– Physical attractiveness (halo effect)– Similarity – Compliments– Contact and cooperation– Conditioning and association (Ivan Pavlov’s dog)

• Flora?

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Authority• Shortcut: We obey authorities mindlessly in

isolation instead of seeing the situation as a whole– Tactics: fake doctors in ads, “according to research”

• We are vulnerable to symbols of an authority– Titles, clothes, accessories, etc.

• People, when asked about it, underestimate this effect.

• Flora?

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Scarcity

• Shortcut: we believe that things that are difficult to own are usually better easier ones– Tactics: “limited offer,” “only today,”– Counterexamples: “Romeo and Juliet,” “Internet

censoring”• Afraid of loss• Scarcity + rivalry– Tactics: auctions, online biddings

• Flora?

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Which Works Better?

• US?– Reciprocation

• Germany?– Commitment & Consistency

• Spanish?– Liking

• Asian?– Authority

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Bonus

• Your MVP should be designed to include– Retention engine– Revenue engine– Growth engine

• Design your growth engine• Make it as part of your final presentation to

get (at most) 10% bonus

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